FocusJAPAN DISASTER: China’s April TDI prices to rise on quake

24 March 2011 05:55[Source: ICIS news]

By Ong Sheau Ling

?xml:namespace>SINGAPORE (ICIS)--Toluene di-isocyanate (TDI) prices in China are expected to rise further in April on supply concerns and speculative trading in the wake of the 11 March earthquake in Japan, industry sources said on Thursday.

“The lack of feedstock and logistics problems are immediate issues that we have to look into,” said a company source.

In the meantime, the producer would use its 120,000 tonne/year Ohmuta-based TDI unit, which was unaffected by the earthquake, to cover both its domestic and export needs, the source said.

Chinese producers withdrew their spot offers after the earthquake hit Japan, while traders based in mainland China and Hong Kong took positions to stock up on cargoes as they expected TDI prices to rise in the wake of the natural disaster, local players said.

“All that speculation is driving up prices,” said a trader in Hong Kong.

However, a Guangzhou-based trader told ICIS that most of the fixtures were being made by traders.

“Foamers are just watching the market,” the trader added.

Nonetheless, TDI makers in Asia said the prices of April TDI shipments would be higher.

“Prices would continue to escalate in April,” said a source from a global TDI major.

Some players said they expect TDI prices to rise to $2,800/tonne CFR CMP/Hong Kong by the end of March or early April.

“A decrease in Mitsui Chemical’s material in the coming month will ease the persistent oversupply and give support to prices,” said a Korean TDI maker, referring to domestic supply being in surplus, which in turn was suppressing local price increases.

A source from Mitsui Chemical told ICIS that the producer’s March shipments will be delayed, but was unable to provide further details about its new schedule.

“We have received news that March allocations would be cut by 10–15% and we are unsure how much we will get in April,” said one of Mitsui Chemical’s customers based in south China.

However, some players disagreed that the earthquake and supply disruptions in Japan would have a significant impact on China’s TDI prices.

“There is no panic in the market yet. This is because there is still plenty of TDI, especially from local makers,” said a Shanghai-based trader.